Lesson 10 Flashcards
Employee share/purchase stock ownership plan
a plan whereby a trust is established to hold shares of company stock purchased for or issued to employees
The trust distributes the stock to employees on retirement, separation from service, or as otherwise prescribed by the plan
Org-wide incentive
Fixed pay
Compensation that is independent of the performance level of the individual, group or organization
Variable pay
any plan that ties pay to productivity or profitability
Fredrick Herzburg and motivation
best way to motivate someone is to organize the job so that doing it provides a challenge and recognition to help satisfy the “higher level” needs
better pay and benefits are “lower level”
Edward Deci and demotivators
extrinsic rewards could detract from the persons intrinsic motivators
The three components to motivation
Expectancy: a persons expectation that their effort will lead to performance
Instrumentality: the perceived relationship between successful performance and obtaining the reward
Valence: the perceived value a person attaches to the reward
Merit pay
any salary increase awarded to an employee based on their individual performance
org-wide
Profit sharing plan
a plan whereby most or all employees share the companies profits
“Cash plans” percentage of profits is distributed as profit shares at regular intervals
org-wide
Gainsharing
org-wide
an incentive plan that engages employees in a common effort to achieve productivity objectives and share the gains
Piecework
operations employee incentive
a system of pay based on the number of items processed by each individual worker in a unit of time
straight piecework plan
a set payment for each piece produced or processed
Guaranteed piecework plan
the minimum hourly wage play an incentive for each unit produced above a set number of units per hour
differential piece rate plan
a plan by which a worker is paid a base hourly rate plus an extra percentage of their base rate for production exceeding the stander per hour or per day
similarly to piecework payment but is based on a percentage premium
team or group incentive
a plan in which a production standard is set for specific work groups and its members are paid incentives if the group exceeds the production standard
what are the three approaches to team incentives
- set work standards for each member of the group and maintain a count of the output of each member (all members receive the highest; all members receive the lowest; all members receive an average)
- set a production standard based on the final output of the group as a whole
- choose a measurable definition of group performance that the group can control
Three basic issues to consider in short term incentives
- eligibility
- how much to pay out (fund size)
- Determining individual award
explain eligibility in short term incentives
- key position: job by job review is conducted to identify the key jobs that have measurable impact on profitability
- salary level cut off
- salary grade cut off
explain fund size in short term incentives
non deductible formula: straight percentage is used to create the short term incentive fund
duductile formula: assumption that short term incentive fund should begin to accumulate only after the firm has met specified level of earnings
expand on determining individual awards in short term incentives
individual award: target bonus is set for each eligible position , a max amount may be set, performance ratings are obtained and the bonus estimates are created
split aware method: manager gets two separate bonuses, one based on performance individual and one on performance company
multipilar method
used to correct the split award method so that poor performers don’t get the company bonus
Capital accumulation programs
long term incentives
often reserved for senior execs
Two long term incentive options
stock share and share units
stock option
a long term incentive for execs that is the right to purchase a stated number of shares of a company stock at todays price at some time in the future
most popular long term incentive
a vesting period is required
when to use incentives
Performance cannot replace good management Firms get what they pay for Pay is not a motivator Rewards rupture relationships Rewards may undermine responsiveness
Implementing incentives (7)
Pay for performance
Link incentives to other activities that engage employees in the buisness
Link incentives to measurable competencies
Match incentives to the culture
Keep group incentives clear and simple
Overcommunicate
Greatest incentive is the work itself
indirect financial payments given to employees. may include supplementary health and life insurance, vacation, pension plans, education plans, and discounts on company products
employee benefits
a federal program intended to provide temporary financial assistance to eligible persons who experience interruption to their work through no fault of their own
employment insurance
advance reasonable notice
advance written notice required if the employer is going to terminate employment of a worker without cause.
only applies to worker whose employment is terminated through no cause of their own
an additional payout on top of the minimum notice period requirements and only applied if the speiicfed conditions in the applicable jurisdiction are met
severance pay
the percentage f expenses in excess of the deductible that are paid for by the insurance plan
coinsurance
the annual amount of health/dental expenses that an employee must pay before insurance benefits will be paid
deductible
individualized benefits plans to accommodate employee needs and preferences
flexible benefits plan
also has required insurance plans to be included
a plan that contains a formula for determining regiment benefits
defined pension plan
a plan in which the employers contribution to the employees retirement fund is specified
defined contribution plan
a planning which a certain amount of company profits is credited to each employees account, payable t retirement, termination or death
deferred profit sharing plan
plans that provide income when employees reach a predetermined retirement age
pension plan 308
What are the 7 government mandated benefits
- EI
- Workers comp
- CPP
- Pay on termination
- Leave of absence
- Paid time off
What are the 6 voluntary benefits
- life insurance
- supplementary health care
- short term disability
- long term disability
- sabbtial
- retirement benefits
what are the three personal services
credit unionts councelling services employee assistance (confidential)
what are the 7 voluntary job related services
- subsidized childcare
- eldercare
- subsidized transportation
- food servies
- educational subsideies
- family friendly benefits
- exec perks
